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May 07, 2008


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1.2 hours per day shopping seems highly unlikely, in my opinion.

As long as you use the calculation using take home pay, then this rule of thumb is correct as long as:

1) you have the option to work or not for pay that hour(s) instead and

2) you would get the same amount of enjoyment out of that hour whether it be spent looking for the bargain or working.

Otherwise, there are too many subjective considerations to even consider using this as a guide.

Once again, we have a time v. money piece that ignores every shred of psychological impact.

Do you LIKE shopping around for a bargain? Do you get a personal sense of satisfaction from saving that $100, no matter how much time you spent on it? Then go ahead and do it, it doesn't matter how much time you spent doing it because you enjoyed it.

Do you HATE spending that time? Then ramp up those numbers quite a bit. Assuming you're spending your own time doing it, multiply your hourly rate up to overtime pay.

I think its a good example of how the law of diminishing returns applies to saving and frugality. Doing the big things like max your retirement savings and establishing a budget so you can live below your means saves you a pretty nice chunk of money with relatively little work on your part. Up to thousands of dollars saved for a few hours of work. Excessive bargain hunting may not necessarily be worth the time put into it. Working overtime might actually be more profitable than bargain hunting. Going to school and getting additional training may pay off greater in time than worrying about the price of pasta.

While I see where she is coming from I think she misses something important. Almost everyone who cares about their finances will bargain hunt to some degree, and bargain hunters can basically be divided into two groups. Those who actually NEED the money and those whose personality inclines them to bargain hunt. For those who need money, every penny matters and they have to find the lowest price as a matter of survival. Once you no longer need the money only those obsessed with getting the lowest price will go that extra bargain hunting mile.

Its the personality component that she misses. As bargain hunting becomes more intrusive and annoying in an individual's life, they will do less of it. While serious bargain hunters may be wasting their time hunting bargains, its an activity they usually derive some sense of enjoyment from.

Personally I'm lazy so I go for a common sense approach. I don't have hard and fast rules or complex pricing tables. That would make me mental. The bigger and easier to get that the bargain is the more likely I am to pursue it.

If you're going to talk time vs money, take the perspective of Dominguez & Robbins in "Your Money or Your Life." These authors encourage you to discover your "real" hourly wage, which is NOT the figure you derived with the shortcut above. Your real hourly wage subtracts out taxes and also the costs of things that you would not buy if you were not working--you wouldn't spend nearly as much on transportation, clothing, take-out and restaurant meals, hiring services like a gardner or a maid if you weren't working. Say taxes are approximately 25% (might be low if you count not only federal income tax but state income tax, Social Security, Medicare, & Unemployment, and that you spend another 15%-20% on extra driving, clothing, and services--well, then that takes your $100K income down to $60K real wage and your hourly figure down to $30. That would be the figure to use in comparison if you wanted to make this assessment, in my view.

I don't get it. My income is earned when I am at my job. I am not always at my job...nor am I allowed to work excessive overtime just to make more money.

So when I go home for the day, and I go shopping for a new matter how much time I spend looking for a better deal doesn't cost me anything. (assuming I don't use hours where I was allowed to get paid at my job).

Am I looking at this wrong?

I think the whole time argument is silly unless you are an hourly employee that could be working more hours. For example, if you are salaried, you're probably still working as much as you need to be working when you're shopping for a bargain. Most people don't take time off work to shop for bargains. So your time above and beyond those hours you agree to put into your job is worth essentially $0, because no one is going to pay you more for those extra hours.

However, if you are an hourly employee that has the option of working more hours instead of shopping, then save the time and work instead.

Stupid fools use their hourly wage at work for normal activities.

Do they think Buffett or Gates don't care about price when they buy stocks since they may make like a million/hr?

what the rule doesn't take into consideration is that "your time" is technically overtime nor does it account for benefits.

If you make 100,000 a year, but also have $50,000 in benefits (health care, matching, insurance, etc.), and you make time and a half for overtime, you should bill yourself $150/2 x 1.5 or $112.5/hr.

Regardless of your "your time" wage, it's your own free time, you can do with it as you please and should't figure out the hypothetical $$ spent doing it.

I agree with Adam. Time can only be equated to money when you are actually going to USE that time to make money.

If you're going to sit on the couch and watch tv instead of look for a good deal on a planned purchase, then you aren't losing anything by bargain-hunting.

90% of the time, this whole "time is money" argument is a complete bullcrap of an excuse not to put forth additional effort for your own benefit. Only when you're working does time = money.

His math is a bit off. If you make a $100,000 a year, each hour is not worth $50, but $11.41. ($100,000 / 365.25 / 24)

I think the authors basic point is something I agree with: You shouldn't spend all day working at something to try to save a few bucks.

First they are equating shopping/ bargain hunting with work. But some of us really enjoy shopping and find bargain hunting an entertaining way to spend our time. And we don't all necessarily want to convert our non-work time into more time spent working. Personally I don't really want to spend all my time working at work. I enjoy my job well enough, but I don't really want to subcontract all my chores and spend more time at work.

Second, most of us can't readily convert our time directly into money. If you work a salary you don't get paid more per hour so your normal day job does not offer extra $ per hour worked. There may be indirect increases in your compensation for more time but its not a direct time = money equation like their $100k annual = $50 /hr equation. I work a salary job, if I work 1 more hour today I will get $0 direct compensation for it. In the long run the extra work might impress my bosses and get me a promotion in a year or two, but theres no direct relationship between time worked and compensation. If you have a job that lets you do more time paid hourly on demand then its OK to equate time to your after tax wages. But if you don't have such a job ( I think most of us don't ) then you'd have to find some other way to convert time into $, like a side job or side business. And your side job or business won't necessarily pay as well as your day job.

I'm reminded of the time my Dad spent all Saturday fixing a broken old lawnmower. He's too frugal / cheap to buy a new one so he spent all day trying to fix a used mower he'd probably spent $10 on and had broken. At the time he was making over $20 an hour at his job and he could have probably bought a new one for $150 or so. By the articles rule of thumb he shouldn't have done it. But he actually *enjoyed* working on other mower, so it wasn't really costing him $180. It was providing entertainment for him. And he didn't have extra work hours available on demand.


I believe they are dividing by 2000 to equate to a normal work week for a full year. If you work 5 days a week 8 hours a day then you work approximately 2000 hours a year.

In a recent and rare visit to a local mall (pardon me, "Retail Resort" as they call it) I mentioned to a clerk in a specialty shop how much I dislike having to shop at all, much less shop at a mall. She commented that after working there for a few months she began to recognize the shoppers who are there almost every single day. How grim is that?

But it might explain that 1.2 hours a day of average shopping time -- those sad souls wandering through stores because they have nothing more interesting in their lives.

One should probably charge something for one's time, and especially for direct costs such as gas driving around doing it. That said, it is difficult to arrive at a single cost or benefit for it. You may enjoy it. You may find some other bargain. You may learn some prices that may come in to use in the future. You may see something else that will give you an idea in the future. Your benefit may not just be cost, but in design, quality, utility, or any number of other things not represented by price.

Personally, I don't like shopping. I do however, love finding. It is very disappointing to shop without finding what you want. Sometimes it is better to defer than accept something less, and sometimes you need something too much and have to accept what is available. My advice is shop enough to know the market, and shop more if it is particularly important to your environment. Not only for the cost of your time, but also the cost of your space. If you spend hundreds per square foot for space, you hardly want to fill it with junk.

I don't particularly like the "divide by 2000, compute your hourly wage, and then compare savings directly to your hourly wage" rule of thumb. I think it's based on some faulty assumptions, such as "you could be at work right now".

But I do like the idea of reflexively thinking about bargains in terms of their hourly value. If you spend an hour calling around and find a $900 price on an item you were going to pay $1000 for, your hour of work netted you $100. If you spend 2 hours going around thrift stores to find a used bathroom rug for $3 when you could've gotten a new one for $15, each hour of work netted you $6 or less.

I use the same consideration when I think about eating out. Between the cost of transportation and the amount of time spent waiting for my food, how much am I actually spending, versus the hassle I'm saving by not having to cook?

I also use the same consideration when buying certain time or labor-saving devices. How much time or effort will such-and-such device save me, versus what I'm spending?

It's up to you to decide... how valuable is your time? Is it worth spending an hour to save $3? What about $15? $30? $300? In the other direction, is it worth spending $300 to save an hour of work? What about $30? $15? $3? (Your answers may differ one direction to the other, for psychological reasons. The thrill of finding a bargain may be worth something to you.)

i love this topic, and coincidentally one that ive adopted years back (ps. im 24).

I can't earn any extra money by working extra hours, so my "hourly wage" to compare is perhaps my blogging income (about 3cents per hour right now).

Also, keep in mind that "a penny saved is a penny earned". In other words if you'd drive across town to save 50cents on canned beans, you ought to be willing to drive across town to save 50cents on a big screen TV. Most people seem to think more about percentages "beans are half off!" vs "saving 50cents on a $2000 TV is worthless". Paying attention to how much time it takes you to save a particular dollar amount is a good way of circumventing this kind of thinking. At the end of the day you saved 50cents, no matter how. Was that 50cents worth the time it took?

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